Jakarta, IO – Does Singapore steal Indonesia’s money?

In economic terms, the answer is “Yes” – but not in a simple manner of theft. What happens is capital out-flow, and in a more pointed political economy sense, capital flight: the movement of financial value, corporate profits, investment structures, intellectual property, family wealth, and strategic economic decision-making from one country to another.

This does not mean Singapore physically takes Indonesia’s money. Singapore does not steal in the criminal sense. Instead, Singapore has built an institutional system that is trusted, efficient, predictable, and globally connected: Indonesian capital, regional headquarters, commodity transactions, legal contracts, arbitration processes, family offices, investment vehicles, and corporate treasury functions all tend to be parked, structured, or managed there. That is the deeper problem.

I have seen this for myself, as an Investment Expert, working directly with Batam Free Trade Zone Authority Corporation (BP Batam).

Batam is one of Indonesia’s most strategic economic spaces. It is located next to Singapore, is linked to regional supply chains, has industrial estates, ports, manufacturing clusters, tourism flows, digital infrastructure, and special economic zone facilities. Even so, many higher-value economic decisions related to investment, finance, contracts, technology and corporate structuring are still made outside Batam and often outside Indonesia.

The factory may be in Indonesia, but the financing is in Singapore. The workers may be Indonesian, but the corporate treasury may be overseas. The land, ports, and industrial activity might be in Batam, but the headquarters, legal structure, intel lectual property, insurance, arbitration, or investment holding company may be across the border. The real economic activity is here, but the higher-value layer is often captured elsewhere.

So, does Singapore steal Indonesia’s money? In legal terms, not necessarily. But from a perspective of the political economy, Indonesia has allowed too much of its economic value to leave the country through capital outflows, institutional arbitrage, regulatory uncertainty and weak domestic value capture. And this is why the real problem is not Singapore. Singapore has done what a small country must do to prosper: build trust, speed, legal certainty, financial sophistication and global connectivity. The real issue is why Indonesia, with its huge economy, natural resources, industrial base and domestic market, has not yet built enough trusted cities to hold in Indonesia more value and to secure yet more trust.

It is in this context that Batam becomes so important. Batam should not be viewed as Singapore’s enemy, but as Indonesia’s alternative city to Singapore, set to take advantage of capital flows that have long trekked across the border. Batam can be the place where Indonesia gives investors what they want in Singapore: certainty, speed, efficiency, legal trust, financial services, logistics access, digital infrastructure, skilled talent and regional connectivity. But Batam must be considered as more than a manufacturing island. Batam must be converted into a full political economy platform for Indonesia.

First, Batam should be Indonesia’s trusted investment gateway. Investors in Indonesia should be able to use Batam as a first landing point for licensing, industrial location, work-force matching, tax facilitation, regulatory coordination and dispute resolution. A serious investor should not need to deal with ambient uncertainty on their own. Batam should be the city where Indonesia shows that bureaucracy can be fast, professional, honest and predictable.

Second, Batam should become Indonesia’s corporate and treasury services center. Singapore is in fact a critical nexus for many companies as a reliable banking center, corporate structure, regional treasury, and international banking destination. Indonesia can create a stronger alternative in Batam, passing and enforcing regulations from Bank Indonesia and OJK, tax authorities, and anti-money laundering institutions. The idea is not to create a tax haven. The goal is to establish a trusted Indonesian financial and corporate services center, one that reserves more value within the national economy.

Third, Batam should become Indonesia’s international commercial and arbitration center. One of Singapore’s greatest advantages is not just money, but legal certainty. For Indonesia to curb capital flight, investors need to rest assured that contracts will be upheld, disputes resolved, and business risks kept transparent. Batam can host a credible commercial dispute-resolution ecosystem, one that is based on international standards but still remains within Indonesia’s sovereign legal and economic framework.

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Fourth, Batam needs to be an Information Technology and Data Infrastructure City. Singapore is constrained in land, energy and space. Batam can host data centers, cloud infrastructure, cybersecurity operations, AI talent and digital services, to support Indonesia and the region. But reliable energy, clean power delivery, data governance, submarine cable service, and a holistic talent-development strategy will have to be established.

Fifth, Batam should be an innovation city. If Indonesia only has land and labor, we will still be at the bottom of the value chain. Batam should develop science parks, technology parks, applied research centers, university-industry partnerships, and innovation financing.

The city needs to move from “made in Batam” to “designed, financed, protected, and scaled from Batam.” It is not against Singapore. In fact, Indonesia and Singapore should remain partners. Singapore has capital, credibility, networks, legal expertise, and worldwide reach. Indonesia has market size, resources, labor, land and industrial depth.

The future should not have to be built on hostility. It rather needs to be erected on a new balance: Singapore can remain a partner, but Batam needs to become Indonesia’s own platform to capture value.

I believe Batam has the ingredients. It has location. It has industrial capacity. It has regional connectivity. It has investor familiarity. It has national strategic importance. What it needs now is a stronger institutional mandate: to become Indonesia’s front-line city for reversing capital outflow.

The lesson is clear. Capital does not move because of tax rates. Capital moves confidently when trust is established. Capital moves when assured of legal certainty. Capital moves when speedy. Capital moves because institutions guarantee it. If Indonesia wants to reserve more of its money at home, we must build institutions that capital will trust. Batam can be that experiment.

Batam can be the place where Indonesia stops asking why money leaves and starts structuring a system that retains money. So, does Singapore steal Indonesia’s money? In a criminal sense, no. But in economic terms, Indonesia has been losing value through capital outflows. And the best response is not anger. The best response is strategy. That strategy should originate in Batam.